Gross Official Reserves Increased by US1.81bn in February 2018

Gross
official reserves increased by US$1.81bn in February to US$42.49bn. The rapid
accumulation of US$12.85bn over 12 months can be traced largely to two sizeable
Eurobond launches and the recovery in oil export revenues (through the NNPC’s
share of production).

We should add the CBN’s fx reforms in H1 2017 because they have
attracted substantial autonomous inflows and so reduced its need to supply fx
to the market. The three factors behind this rapid accumulation could all turn
negative, of course, although this is not our central scenario.These
unorthodox fx policies did not impact upon the highly successful Eurobond issue
last month, the proceeds of which are still being banked.

The
CBN will be pleased with the encouraging signals from the NAFEX window.
Turnover (ie both sides of trades) from its opening in April 2017 to 06 March
amounts to US$37.0bn. The weekly average has settled well above US$1.0bn.

Reserves
at end-February covered 15.8 months’ merchandise imports, and 10.6 months when
we include services.

Our chart makes a comparison with South
Africa although reserves are captured differently in the two countries. The
SARB shows gross reserves (a total of gold, fx and SDR holdings), from which it
deducts movements in fx deposits and in the forward position to arrive at the
international liquidity position (ILP, per the chart).This has been relatively stable over the
past 12 months, reflecting its relatively diversified economy. The days when
South Africa held the number one rank among world gold producers belongs to the
distant past.The CBN produces rather less detail. Its series
for reserves covers just fx, and the data is gross. Separate partial data show
flows of swaps but not the outstanding stock of obligations.Related
News

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